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Fortuna april 2012_investor_presentation

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  • 1. San Jose Mine,  Mexicowww.fortunasilver.com APRIL 2012
  • 2. Regulatory DisclaimerCertain statements in this presentation constitute forward‐looking statements and as such are based on anassumed set of economic conditions and courses of action. These include estimates of future productionlevels, expectations regarding mine production costs, expected trends in mineral prices and statements thatdescribe Fortuna’s future plans, objectives or goals. There is a significant risk that actual results will vary,perhaps materially, from results projected depending on such factors as changes in general economicconditions and financial markets, changes in prices for silver and other metals, technological and operationalhazards in Fortuna’s mining and mine development activities, risks inherent in mineral exploration,uncertainties inherent in the estimation of mineral reserves, mineral resources, and metal recoveries, thetiming and availability of financing, governmental and other approvals, political unrest or instability incountries where Fortuna is active, labor relations and other risk factors.Thomas I. Vehrs, Ph.D., Vice President of Exploration, is the Qualified Person for Fortuna Silver Mines Inc. asdefined by National Instrument 43‐101. Dr. Vehrs is a Founding Registered Member of The Society forMining, Metallurgy, and Exploration, Inc. (SME Registered Member Number 3323430RM) and is responsiblefor ensuring that the information contained in this presentation is an accurate summary of the originalreports and data provided to or developed by Fortuna Silver Mines. 2
  • 3. Corporate Objective To create value through the rational acquisition, exploration, development and  mining of silver in Latin America Caylloma Mine, Peru 3
  • 4. Core AssetsOperating and Exploring in Latin AmericaProduction San Jose Mine, Mexico Caylloma Mine, PeruExploration Exploring in Mexico and Peru; two  largest silver producing countries in  the world 44,000 meter drill program for 2012  4
  • 5. Company SnapshotStrong Balance Sheet Share Structure Exchanges US$56 million in cash (end 2011)  Outstanding: 123.1 million US$20 million undrawn   Fully diluted: 128.8 million credit facility No long term debt No hedging Frankfurt: F4S.F Fortuna´s Share Price vs Silver Price (April 2011 – April 2012 )  5
  • 6. Financial SnapshotStrong Revenue and Margin Growth Revenue 110,004 US$ 000s 74,056 Silver and Gold Revenue Mix 51,428 1% 4% 4% 7% 3% 23% 14% 21% 2009 2010 2011 15% Copper Revenue Margins 23% Gold Revenue 35.00 29% Cash Cost* 31.11  Zinc Revenue 30.00 Silver Net Realized Price 25.00 30.74 Lead RevenueUS$/oz 20.00 18.18  Silver Revenue 13.75  30.74 64% 15.00 24.04 10.00 18.61 44% 49% 24.04 5.00 18.61 ‐ (5.00) 0.37  (4.86) (5.86) (10.00) 2009 2010 2011 2009 2010 2011 * Net of by product credits 6
  • 7. Key MilestonesFoundations of a Leading Silver Mining Company Shares begin  trading on  Shares begin  NYSE trading on TSX >> Acquired 100%  >> Signed option  interest in San  Reported agreement to  Shares begin  Jose positive pre‐ acquire 100%  trading  >> feasibility study  stake in Mario  Successful  on BVL drilling  at San  Received EIS  at San Jose Property Commenced Jose  >> approval and  >> >> production at  significantly  Increased silver  permits for San  Started  Commenced  Company  Caylloma on  increased Ag Eq  production Jose construction of  commercial  established time and on  resources    by 85%  >> San Jose Mine production at  >> budget  Increased silver  >> San Jose, on Shares trade on  >> production by  Increased silver  time and on  the TSX.V Acquired stake  96%  production budget >> in  by 13% Acquired San Jose Caylloma Mine 2005 2006 2007 2008 2009 2010 2011 7
  • 8. Investment Highlights 1 Emergence of a leading silver mining company in Latin America 2 Proven mine builders and operators 3 Strong cash flow and sustainable growth from existing mines 4 Brownfields exploration upside 5 Disciplined acquisition strategy 8
  • 9. Emergence of a Leading Silver Mining CompanySustainable Mineral Reserve and Resource Growth   140.0 Inferred Resources 120.0 Measured & Indicated Resources Proven & Probable Reserves Contained Metal ‐ Ag Eq (Moz) * 100.0 80.0 60.0 40.0 20.0 0.0 2005 2006 2007 2008 2009 2010 2011 * Ag Eq calculated using Ag = US$25.14/oz and Au = US$1,391.63/oz 9
  • 10. Emergence of a Leading Silver Mining CompanyIncreasing Exposure to Silver 2014E consolidated production:  8.0 6.4M Ag Eq oz +  base metals Caylloma Mine BM Ag Eq (Pb + Zn) 7.0 San Jose Mine Ag Eq (Ag + Au) Caylloma Mine Ag Eq (Ag + Au) 6.0 5.0 Ag Eq (Moz)* 4.0 3.0 2.0 1.0 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 PRODUCTION FORECAST *  Ag Eq calculated using Ag = US$30/oz, Au = US$1,660/oz ,  Pb = US$2,300/t and Zn = US$2,000/t  10
  • 11. Proven Mine Builders and Operators Senior ManagementJorge A. Ganoza Dr. Thomas I. Vehrs Cesar Pera Luis Dario Ganoza Manuel Ruiz‐Conejo President,  Vice President,  Vice President,  Chief Financial Officer Vice President, CEO and Director  Exploration Human & Organizational  Operations DevelopmentCo‐founder of  Over 35 years  Over 25 years  Over 15 years  Over 25 years Fortuna Silver.  experience managing  experience in  experience in  experience in the Peruvian geological  exploration programs  organizational  the operations  execution of multi‐engineer. Identified  in the Americas. development and  and financial  million dollar and negotiated  change in Latin  management of  mining projects purchase of  American  public mining  and the Caylloma, built the  companies. companies. implementation Fortuna Silver  of community Mine´s team. relations programs. 11
  • 12. Proven Mine Builders and OperatorsBoard of DirectorsSimon Ridgway Chairman of the Board Robert R. Gilmore Mario Szotlender Tomas GuerreroCo‐founder of Fortuna  30 years of experience working  Co‐founder of Fortuna  Geological engineer with Silver. Vancouver‐based  with resource companies and  Silver. Financier,  over 30 years experience.  mining financier. Also  currently serves as Chairman of  businessman and Director  Served as Director of founded Focus Ventures,  the Board for Eldorado Gold  of Radius Gold, Endeavour  Explorations for the Radius Gold, Mar West  Corporation and as a Director for  Silver, Magellan, Focus  Hochschild Group.Resources and Northland  Layne Christensen Company. Ventures and Iron Creek.Resources.Jorge A. GanozaPresident and CEO  Thomas Kelly Michael IversonCo‐founder of Fortuna  36 years of experience in mine  Chief Executive Officer of Fortuna Silver. Peruvian geological  production, minerals industry  from 1998 to January 2005. engineer. Identified and  consulting and corporate  President and Director of Niogold negotiated purchase of  management in various Latin  Mining Corp. since 1998.Caylloma, built the Fortuna  American countries; currently Silver Mine´s team. serves as Chief Executive Officer of  Apurimac Ferrum, a private  company developing iron ore  assets in Peru. 12
  • 13. Caylloma Mine, PeruOverview 100% owned 1,300 tpd underground operation Ag ‐ Pb & Zn concentrates Reserve life = 8 years 13
  • 14. Caylloma Mine, Peru  Solid Reserve and Resource Base Contained Metal Tonnes  Ag Au Pb Zn Classification (000) (g/t) (g/t) (%) (%) Ag Au (Moz) (koz)Proven & Probable Reserves 4,642  135 0.33 1.33 1.93 20.2 49.5Measured & Indicated Resources 2,258 123 0.30 0.85 1.28 8.9 21.8Inferred Resources 3,258 112 0.36 0.99 1.50 11.8 37.9 Notes to Mineral Reserve and Mineral Resource tables prepared in accordance with NI 43 ‐ 101:   Mineral Reserves and Mineral Resources are as defined by the CIM Definition Standards on  Mineral Resources and Mineral Reserves  Mineral Resources are exclusive of Mineral Reserves  Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability  Caylloma Mineral Resources and Mineral Reserves are estimated as of June 30, 2011 and  reported as of December 31, 2011  Refer to www.fortunasilver.com for full disclosure 14
  • 15. San Jose Mine, MexicoOverview 100% owned 1,000 tpd underground operation High grade Ag ‐ Au concentrate  Reserve life = 9 years 15
  • 16. San Jose Mine, MexicoSolid Reserve and Resource Base Contained Metal Tonnes  Ag Au Classification (000) (g/t) (g/t) Ag Au (Moz) (koz) Probable Reserves 3,600 204 1.59 23.6 183.7 Indicated Resources 376 243 2.12 2.9 25.6 Inferred Resources 3,072 223 1.80 22.0 178.1 Notes to Mineral Reserve and Mineral Resource tables prepared in accordance with NI 43 ‐ 101:   Mineral Reserves and Mineral Resources are as defined by the CIM Definition Standards on  Mineral Resources and Mineral Reserves  Mineral Resources are exclusive of Mineral Reserves  Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability  Mineral Reserves and Mineral Resources reported as of December 31st, 2011  Refer to www.fortunasilver.com for full disclosure 16
  • 17. San Jose Mine, MexicoCommercial Production Declared in September 2011 Construction and commissioning on‐time and on‐budget Construction CAPEX of US$55 million Plant expansion to 1,500 tpd initiated in 2012 LOM average cash cost per Ag Eq oz = US$7.84 17
  • 18. San Jose Mine, MexicoUnderground Mine Design North South Service Raise L 1540 Main Ramp Auxiliary BranchAuxiliary Ramp L 1400 Ventilation Raise L 1360 L 1300 LEGEND Main Levels Projected Ramp Ore Pass Projected Level L 1200 Indicated Resources Inferred Resources Waste Pass Production block L 1100 18
  • 19. San Jose Mine, MexicoAg Eq Production Forecast 6,000 Au (Ag Eq) 5,155 5,000 4,861 4,471 4,634 Ag 4,309 4,000Ag Eq (´000s oz)* 3,261 3,000 2,603 2,000 1,000 783 0 2011 2012 2013 2014 2015 2016 2017 2018 *  Ag Eq calculated using Ag = US$ 23.60/oz, Au = US$ 1,350/oz; metallurgical recoveries of 88% & 90% for Ag and Au respectively 19
  • 20. Brownfields Upside, CayllomaProlific Mining District Source: INGEMMET 20
  • 21. Brownfields Upside, CayllomaExploration SuccessFueling Growth 11,000 ha concession package Expand resource base through  exploration of veins with  potential for high‐grade silver  mineralization  21
  • 22. Brownfields Upside, San JoseUnder‐Explored Mining District Source: Mexican Geological Society 22
  • 23. Brownfields Upside, San JoseCommanding Land Position 58,000 ha concession package Soil and stream sediment sampling  identified multiple geochemical  gold anomalies Significant resource growth  potential within trucking  distance to processing plant Stream Sediment Results 23
  • 24. Mario Project, PeruCentral Peru Silver‐Base Metal Belt 24
  • 25. Mario Project, PeruCommitment to Growth Highlights of Historic Drilling Located in Junin, central Peru Hole ID From  To Drill Int.  Ag Au  Pb Zn (m) (m) (m) (g/t) (ppb) (%) (%) 4,900 contiguous hectares FO‐06‐02 1.45 8.90 7.45 192 440 1.21 1.77 Highly prospective silver‐gold‐ FO‐06‐03 111.00 129.75 18.75 265 554 2.57 12.61 FO‐06‐05 59.20 131.40 72.20 44 974 0.55 0.66 base metal mineralization FO‐06‐07 39.30 56.15 16.85 390 483 4.86 6.90 US$4 million purchase option  FO‐07‐25 174.30 177.70 3.40 309 119 0.36 0.52 agreement + NSR royalties  FO‐08‐29 70.30 81.80 8.75 658 229 6.04 1.32 FO‐08‐29 111.10 117.00 5.90 523 875 5.56 6.85 with buyback provisions  O‐08‐29 125.80 133.05 7.25 176 694 2.93 4.77 FO‐08‐34 107.10 149.85 42.75 31 1,047 0.54 0.55 PU‐00‐01 143.90 152.60 8.70 404 NA 3.16 11.34 PU‐00‐03 89.45 91.00 1.55 1,021 NA 13.96 2.98 PU‐00‐08 29.45 38.60 9.15 560 NA 6.35 26.10 PU‐00‐09 50.70 54.55 3.85 486 NA 4.91 7.87 PU‐03‐24 10.30 18.80 8.50 283 315 2.56 3.14 PU‐03‐28 72.20 85.80 13.60 303 2,918 3.96 11.05 PU‐03‐29 23.00 27.00 4.00 434 315 2.65 3.44 PU‐03‐38 141.70 145.90 4.20 475 417 4.24 1.88 25
  • 26. Community Relations ProgramForging Strategic Partnerships Programs are based on respect for ethno‐cultural diversity, open communication  and effective interaction with all stakeholders We work with communities towards self‐development of economically sustainable  activities to improve their quality of life 26
  • 27. Growth StrategyThree‐Pronged Approach to Create Shareholder ValueMaximize production,   Execute on production ramp‐up at San Jose by 4Q 2013profitability and cash   Focus on operational efficiencies to reduce cash costs flow of current mines  Off‐site Ag ‐ Au concentrate leaching facility at San Jose Capitalize on   44,000 meter exploration program between Peru and Mexico brownfields   Two crews evaluating multiple Ag ‐ Au anomalies at San Jose exploration  opportunities  Commanding land packages in Peru and Mexico  Post discovery, pre‐development opportunities in Latin America      Pursue selective  Silver contribution of >50% of revenue M&A opportunities   Below industry median for cash cost  27
  • 28.  Proven operators and mine builders in Latin America Organic growth potential Consistent cash generation Caylloma Mine Peru 28
  • 29. Management Head OfficeCarlos BacaT: +51.1.616.6060, ext. 0Corporate OfficeHolly HendershotT (Toronto): +1.647.725.0813T (Vancouver): +1.604.484.4085 www.fortunasilver.com APRIL 2012

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